20 June 2015
At the rate 10% As per provision of section 115 A(1) (b) of the Income Tax Act 1961 ,a foreign company includes any income by way of Royalty other then income referred in Sub Section 1 of Section 44AD of income tax act received from a Indian concern ,the income tax payable shall be calculated at the rate of 25 % of the royalty income wef 1-04-2013 .Section 44DA relates to foreign company carrying on business through a P.E .How ever ,the rate of tax will not exceed the rate mentioned in DTAA . Therefore ,since your client is paying Royalty to a foreign company which is not having a P.E. ,your client is liable to deduct Tax At Source as per provision of Section 195 of the Income Tax Act .
CAclubindia
